How Much Money Do I Really Need to Buy a House in San Jose?

San Jose’s median home price sits around $1.45 million in mid-2025. But beyond the sticker price, how much money do you truly need to step across the threshold? In this guide, we’ll break down:

• Purchase price benchmarks: average vs. median by neighborhood

• Loan requirements: down payment, PMI, and mortgage types

• Closing costs: fees, taxes, and prepaids

• Ongoing costs: property taxes, insurance, HOA, maintenance

• Financial assistance: first-time buyer programs, ADU rental income, and more

By the end, you’ll know exactly what to save and how to leverage local opportunities—from Evergreen (95123) to Almaden, Silver Creek, and Cupertino.

1. Establishing Your Purchase Price Range

1.1 Median & Average Prices by Neighborhood

Tip: Start by defining your target ZIP code to focus on realistic prices and avoid wasted searches.

2. Down Payment & Mortgage Requirements

2.1 Conventional Loan Basics

• Minimum Down: 20% ($296K on $1.48 M) to avoid PMI.

• PMI Option: 10% down ($148K) + PMI adds $200–$350/month.

2.2 Jumbo vs. Conforming Loans

• Conforming Limit: $726,200 (2025), requires jumbo for most San Jose homes.

• Jumbo Rates: ~0.25% higher—factor into monthly cost.

2.3 First-Time Buyer Programs

• CalHFA Dream for All: Down-payment assistance up to 3%.

• County Grants: Local programs in Santa Clara County offering $10–$30K in assistance.

• VA & Physician Loans: 0% down for qualifying veterans and medical professionals.

Action: Consult a mortgage broker early to get pre-approved and identify which loan programs you qualify for.

3. Closing Costs & Prepaids

3.1 Typical Closing Fees (2–5% of Purchase Price)

• Lender Fees: Application, underwriting, and rate lock—$2,000–$4,000.

• Title & Escrow: Title insurance, escrow fees—$3,000–$5,000.

• Recording & Transfer Taxes: Santa Clara County’s transfer tax $3.30 per $1,000 of sale price ($4,884 on $1.48 M).

3.2 Prepaids & Reserves

• Property Taxes: Prorated at closing—may require 6 months escrow (~$9,000).

• Homeowners Insurance: First-year premium escrow (~$1,200).

• HOA Initiation (Condos): Fee and reserves deposit—$500–$1,000.

Application: Ask your lender for a Loan Estimate and your realtor for a detailed Closing Cost Worksheet to budget accurately.

4. Ongoing Ownership Costs

4.1 Property Taxes & Assessments

• Base Rate: ~1.18% of assessed value ($17,500–$18,500 annually).

• Annual Increases: Up to 2% under Prop 13, plus Mello-Roos or bond assessments ($300–$1,000/year).

4.2 Homeowners Insurance & Maintenance

• Insurance Premium: $1,200–$1,400/year for SFRs; $800–$1,000 for condos.

• Maintenance Budget: 1–2% of home value per year (~$15K–$30K on a $1.5 M home).

4.3 HOA Fees (Condos/Townhomes)

• Silver Creek: $700–$750/month covers landscaping, pool, security.

• Almaden Gated Communities: Up to $1,000/month for extensive amenities.

Tip: Use a 30-year cost projection sheet to see true monthly obligation—PITI + HOA + maintenance reserves.

5. Income & Affordability Ratios

5.1 Income Benchmarks

• Ideal Housing Expense Ratio: 28% of gross income for PITI.

• San Jose Median Income: $135K → max PITI $3,150/month.

5.2 Bridging the Gap

• Dual Incomes: Two earners at median produce $270K—PITI capacity $6,300/month, enough for median-priced home with 10–20% down.

• Supplement with ADU Income: Renting an ADU for $2,500/month can cover a chunk of mortgage.

Action: Calculate your front-end ratio and explore ADU opportunities to boost affordability.

6. Neighborhood-Specific Strategies

6.1 Evergreen (95123)

• Focus on SFRs with ADU potential to maximize rental income and offset costs.

6.2 Almaden

• Leverage county grants and physician/VA loans for high-priced ranch-style homes.

6.3 Silver Creek Condos

• Plan for higher HOA but lower maintenance; use first-time buyer programs to reduce down payment.

6.4 Cupertino Pockets

• Prepare for steep prices ($2M+)—pool financial resources or consider nearby lower-cost neighborhoods like Creek Valley.

Strategy: Align financing and assistance programs with each neighborhood’s unique cost structure.

7. Case Example: Your Path to Purchase

Profile: First-time buyer couple, combined income $200K, $100K saved.

1. Target Area: Evergreen, median $1.48M.

2. Loan Program: CalHFA 3% down → $44K assistance.

3. Down Payment: 17% ($250K net) + PMI for first year.

4. Closing Costs: Budget 3% → $44K.

5. Monthly Costs:

   • PITI: $7,200

   • PMI: $250

   • Taxes/Insurance escrow reserve: $1,500

   • Maintenance reserve: $1,850
     Total: $10,800/month → 64% of monthly gross ($16.7K) → supplement with ADU rent $2,500 → net $8,300 (~50% ratio).

Outcome: Stretch but doable with ADU income; consider higher assistance or smaller SFR.

Conclusion

Buying a home in San Jose demands significant capital—median $1.45 M means $296K down payment for 20%, plus $50K–$80K in closing costs and prepaids, and ongoing PITI of $7,800–$8,200 per month.

Yet with buyer programs, ADU rental income, and strategic neighborhood choices (Evergreen ADUs, Almaden grants, Silver Creek condos), homeownership remains within reach for qualified buyers. At Block Change Real Estate, we guide you through the data and programs to make your San Jose home purchase a reality, not just a dream. Ready to see what you can afford? Contact us today for a personalized affordability analysis.